Edinburgh to lead Scottish hotel sector growth

SCOTLAND’S hotel sector will continue to grow over the next year with Edinburgh expected to be among the most popular cities in Europe, according to a report.

Along with London and Paris, Scotland’s capital is one of only three cities in Europe forecast to have occupancy rates over 80 per cent in the next year.

A series of events elsewhere in the country over the next 12 months, including the World Gymnastics Championship, Turner Prize and the government’s Year of Food and Drink, will boost the sector in other towns and cities, PwC’s latest European hotel forecast said.

A number of new developments in Edinburgh and Glasgow will lead the growth but it will be slower than 2014, the report said.

Despite the issues facing the North Sea oil and gas industry, Aberdeen hotels still have the highest average daily rates (ADR) outside London at £97.64.

Bruce Cartwright, partner, PwC in Scotland, said: “Here in Scotland, we’re seeing growth driven by a combination of higher ADR and occupancy levels. This could, in part, be attributed to a structural shift towards more branded budget hotels as well as access to online distribution channels and greater propensity by people to travel.

“In strong performing cities - like Edinburgh and Glasgow - which operated at over 80 per cent occupancy in 2014, this gives hotels the confidence to raise rates and in 2015 and 2016, we could see ADR rise by as much as 4.6 per cent, driving RevPar growth of around 5.4 per cent.

“Despite the ongoing oil price challenges, Aberdeen still commands the highest ADR outside of London, at £97.64 - a 9 per cent uplift on the previous year.

“We can expect this trend of strong growth across the three cities to continue over the next two years, albeit at a slower pace to 2014.

“As we look ahead, there is no doubt that the hotel sector faces plenty of challenges, particularly as a result of economic and geopolitical uncertainties. However, we remain optimistic in its ability to compete, adapt and succeed.”